Proposals for a Digital Services Tax in the draft Finance Bill

techUK’s Associate Director for Policy, Giles Derrington responds to the proposals for a Digital Services Tax published today in the draft Finance Bill.

Commenting on the publication of the draft Finance Bill, which includes proposals to introduce a Digital Services Tax, techUK’s Associate Director for Policy, Giles Derrington, said:

“There is no doubt that the system for international taxation needs to evolve to deal with a digitising economy. To do that we need smart and innovative solutions developed at a global level. As a revenue tax targeted on a narrowly defined set of companies, the Digital Services Tax is not one of those smart measures. It risks making investing in the UK less attractive, increasing costs for consumers and will likely hinder progress towards a long term global solution.

“It is also deeply concerning that the UK Government has chosen to press ahead with this proposal after just today the US Government announced an investigation into France for a similar digital tax plan. The US Government has said that this proposal risks creating new non-tariff barriers to trade, and there is a real risk that the Government is putting the UK at risk of retaliation from the US Government that would hurt British businesses and consumers. The proposal runs resolutely counter to the visions for a Global Britain championing free trade.

“While we recognise that the proposals published today are a draft, there remain too many unanswered questions about how this tax will work in practise. At present, the tax could very likely lead to some bizarre outcomes, including increasing costs being passed onto consumers, dis-incentivising investment in R&D and reducing competition. It even risks creating an outcome where UK-based tech firms actually end up paying more tax than their international competitors. It is hard to see how this would be beneficial for the UK economy or for consumers.”

About techUK

techUK represents the companies and technologies that are defining today the world that we will live in tomorrow. Around 850 companies are members of techUK. Collectively they employ approximately 700,000 people, about half of all tech sector jobs in the UK. These companies range from leading FTSE 100 companies to new innovative start-ups. The majority of our members are small and medium-sized businesses.

techUK is committed to helping its members grow, by:

• Developing markets

• Developing networks

• Reducing business costs and risks

techUK is the trading name for Information Technology Telecommunications and Electronics Association, a company limited by guarantee.